25 January 2003
Extent and Ramifications of Rowecom Financial Problems
It has been suggested, although the figures have not been substantiated, that Divine-Rowecom may have taken up to $50-80 million in subscriptions money which has not been passed on to the publishers.
However, a group of librarians in the USA have got together to sue Divine Rowecom for a similar figure, which it is believed includes a strong damages element, so it could be that this story has been 'confused in translation.'
Nevertheless, it does pose questions about how a company can either not realise the extent of its financial difficulties, which suggests a sticking in the sand of heads of breathtaking proportions.
An alternative explanation is that monies were accepted for subscriptions in the knowledge that the said monies were unlikely to be passed on to the suppliers of the goods.
A further possibility is that subscription fees were accepted on the understanding that the parent company would cover Rowecom financially, which we have seen Divine have subsequently declined to do.
Whatever the scenario, there are serious questions to be answered about these circumstances were ever allowed to become so grave, and lessons to be learned to protect libraries and publishers from the financial loss that the Rowecom debacle may yet bring them.
GRC
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